Organization and Description of the Business	12 Months Ended
Dec. 31, 2022
Organization and Description of the Business
Organization and Description of the Business	1. Organization and Description of the Business We are a commercial-stage pharmaceutical company dedicated to the development of innovative therapeutics for the treatment of seizure disorders, including rare genetic epilepsies and status epilepticus. On March 18, 2022, the U.S. Food and Drug Administration (FDA) approved our new drug application (NDA) for the use of ZTALMY (ganaxolone) oral suspension for the treatment of seizures associated with Cyclin-dependent Kinase-like 5 Deficiency Disorder (CDD) in patients 2 years of age and older. In June 2022, the U.S. Drug Enforcement Administration (DEA) published an interim final rule in the Federal Register placing ganaxolone and its salts in schedule V (CV) of the Controlled Substances Act (CSA), which rule became final on December 9, 2022. ZTALMY, our first FDA approved product, became available for commercial sale and shipment to patients with a prescription in the U.S. in the third quarter of 2022. We plan to develop ganaxolone for the treatment of other rare genetic epilepsies, including Tuberous Sclerosis Complex (TSC), and for the treatment of status epilepticus (SE). The continued global spread of COVID-19 has impacted our clinical operations and timelines. For example, our RAISE trial is conducted in hospitals, primarily intensive care units in academic medical centers, which have experienced high rates of COVID-19 admissions. Several of these sites participating in the RAISE trial have experienced COVID-related difficulties, including staff turnover and the need to devote significant resources to patients with COVID-19, which has resulted in site initiation and enrollment delays for the RAISE trial. Given these COVID-19-related challenges and the interruption in drug supply in mid-2022, we previously adjusted our expectation for our top-line data readout for the RAISE trial to the second half of 2023. In May 2022, we resumed screening and recruitment for the RAISE trial. Several of the sites participating in the RAISE trial continue to encounter COVID-related setbacks, including staff turnover and the need to devote significant resources for patients with COVID-19. In addition, our ganaxolone clinical trials in the outpatient setting may be negatively impacted if patients and their caregivers do not want to participate while the COVID-19 pandemic persists. The duration and severity of the pandemic and its long-term impact on our business are uncertain at this time. Liquidity Since inception, other than for the three months ended September 30, 2022 due to a one-time net gain from the sale of our Priority Review Voucher (PRV), we have incurred net losses and negative cash flows from our operations. We incurred a net loss of $19.8 million for the year ended December 31, 2022. We have generated limited product revenues, and there is no assurance that profitable operations will be achieved in the future, and if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and preclinical testing, and commercialization of ganaxolone, in indications other than CDD in the US, will require significant additional financing. Our accumulated deficit as of December 31, 2022 was $430.5 million and we expect to incur substantial losses in future periods. We plan to finance our future operations with a combination of proceeds from the issuance of equity securities, the issuance of debt, government funding, collaborations, licensing transactions and other commercial transactions or other sources, and revenues from future product sales, if any. We have not generated positive cash flows from operations, and there are no assurances that we will be successful in obtaining an adequate level of financing for the continued development and commercialization of ganaxolone. Management’s operating plan which underlies the analysis of our ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. Actual results could vary from the operating plan. We follow the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess our ability to continue as a going concern within one year after the date the financial statements are issued. In the year ended December 31, 2022 the following events occurred: in August 2022, we secured additional funding of $107.4 million in net proceeds from the closing of the PRV transaction with Novo Nordisk, Inc.; in October 2022, we entered into a royalty monetization agreement with Sagard Healthcare Partners, pursuant to which we received a total of $32.5 million upfront in return for royalty payments on U.S. net sales of ganaxolone; we entered into a collaboration and supply agreement with Tenacia, pursuant to which we received a total upfront payment of $10.0 million; and in November 2022, we completed a public offering resulting in approximately $64.5 million in net proceeds including the full exercise of the underwriters’ overallotment option after deducting underwriting discounts and commissions. As a result of these events, the going concern uncertainty that was disclosed in the financial statements for the year ended December 31, 2021 was alleviated during 2022. We believe that our existing cash and cash equivalents on hand as of December 31, 2022, will be sufficient to fund our operating expenses and capital expenditure requirements, as well as maintain the minimum cash balance required under our debt facility, into the second half of 2024. However, we will need to secure additional funding in the future, from one or more equity or debt financings, government funding, collaborations, licensing transactions, other commercial transactions or other sources in order to carry out all of our commercialization and planned research and development activities with respect to ganaxolone.

Organization and Description of the Business

12 Months Ended

Dec. 31, 2022

Organization and Description of the Business

Organization and Description of the Business

1. Organization and Description of the Business

We are a commercial-stage pharmaceutical company dedicated to the development of innovative therapeutics for the treatment of seizure disorders, including rare genetic epilepsies and status epilepticus. On March 18, 2022, the U.S. Food and Drug Administration (FDA) approved our new drug application (NDA) for the use of ZTALMY (ganaxolone) oral suspension for the treatment of seizures associated with Cyclin-dependent Kinase-like 5 Deficiency Disorder (CDD) in patients 2 years of age and older. In June 2022, the U.S. Drug Enforcement Administration (DEA) published an interim final rule in the Federal Register placing ganaxolone and its salts in schedule V (CV) of the Controlled Substances Act (CSA), which rule became final on December 9, 2022. ZTALMY, our first FDA approved product, became available for commercial sale and shipment to patients with a prescription in the U.S. in the third quarter of 2022. We plan to develop ganaxolone for the treatment of other rare genetic epilepsies, including Tuberous Sclerosis Complex (TSC), and for the treatment of status epilepticus (SE).

The continued global spread of COVID-19 has impacted our clinical operations and timelines. For example, our RAISE trial is conducted in hospitals, primarily intensive care units in academic medical centers, which have experienced high rates of COVID-19 admissions. Several of these sites participating in the RAISE trial have experienced COVID-related difficulties, including staff turnover and the need to devote significant resources to patients with COVID-19, which has resulted in site initiation and enrollment delays for the RAISE trial. Given these COVID-19-related challenges and the interruption in drug supply in mid-2022, we previously adjusted our expectation for our top-line data readout for the RAISE trial to the second half of 2023. In May 2022, we resumed screening and recruitment for the RAISE trial. Several of the sites participating in the RAISE trial continue to encounter COVID-related setbacks, including staff turnover and the need to devote significant resources for patients with COVID-19. In addition, our ganaxolone clinical trials in the outpatient setting may be negatively impacted if patients and their caregivers do not want to participate while the COVID-19 pandemic persists. The duration and severity of the pandemic and its long-term impact on our business are uncertain at this time.

Liquidity

Since inception, other than for the three months ended September 30, 2022 due to a one-time net gain from the sale of our Priority Review Voucher (PRV), we have incurred net losses and negative cash flows from our operations. We incurred a net loss of $19.8 million for the year ended December 31, 2022. We have generated limited product revenues, and there is no assurance that profitable operations will be achieved in the future, and if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and preclinical testing, and commercialization of ganaxolone, in indications other than CDD in the US, will require significant additional financing. Our accumulated deficit as of December 31, 2022 was $430.5 million and we expect to incur substantial losses in future periods. We plan to finance our future operations with a combination of proceeds from the issuance of equity securities, the issuance of debt, government funding, collaborations, licensing transactions and other commercial transactions or other sources, and revenues from future product sales, if any. We have not generated positive cash flows from operations, and there are no assurances that we will be successful in obtaining an adequate level of financing for the continued development and commercialization of ganaxolone.

Management’s operating plan which underlies the analysis of our ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. Actual results could vary from the operating plan. We follow the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess our ability to continue as a going concern within one year after the date the financial statements are issued. In the year ended December 31, 2022 the following events occurred: in August 2022, we secured additional funding of $107.4 million in net proceeds from the closing of the PRV transaction with Novo Nordisk, Inc.; in October 2022, we entered into a royalty monetization agreement with Sagard Healthcare Partners, pursuant to which we received a total of $32.5 million upfront in return for royalty payments on U.S. net sales of ganaxolone; we entered into a collaboration and

supply agreement with Tenacia, pursuant to which we received a total upfront payment of $10.0 million; and in November 2022, we completed a public offering resulting in approximately $64.5 million in net proceeds including the full exercise of the underwriters’ overallotment option after deducting underwriting discounts and commissions. As a result of these events, the going concern uncertainty that was disclosed in the financial statements for the year ended December 31, 2021 was alleviated during 2022. We believe that our existing cash and cash equivalents on hand as of December 31, 2022, will be sufficient to fund our operating expenses and capital expenditure requirements, as well as maintain the minimum cash balance required under our debt facility, into the second half of 2024. However, we will need to secure additional funding in the future, from one or more equity or debt financings, government funding, collaborations, licensing transactions, other commercial transactions or other sources in order to carry out all of our commercialization and planned research and development activities with respect to ganaxolone.